Adjunct Professor Ruled an Employee


The Tax Court held that an adjunct university professor was a common-law employee and not a statutory employee or independent contractor, since he exercised only limited control over his course curriculum and materials and the university considered him its employee.

William Schramm was an adjunct professor at Nova Southeastern University (NSU) teaching online courses in economics. The university required Schramm to follow various employment policies, including ones on sexual harassment, drugs and conflicts of interest. He was paid a fixed amount for each course that he taught. Although the university provided Schramm with the dates the courses were to be held, an overall description of the courses to be taught and a website interface for each course, he prepared detailed course syllabuses. He also established his own work hours and was able to work remotely by computer. The university withheld federal income and employment taxes from Schramm’s wages. At the end of each year, NSU issued Schramm a Form W-2 on which it did not check box 13 to indicate that he was a statutory employee.

In January 2007, Schramm wrote NSU, requesting clarification of his employment relationship. The university sent him a letter advising him that NSU classified all of its adjunct professors (including him) as common-law employees and not as statutory employees or independent contractors. On his 2006 federal income tax return, Schramm reported his income from NSU as business income on Schedule C rather than as wages. He also claimed business expenses of more than $2,700 on his Schedule C for expenses related to his NSU employment.

After the IRS determined a $3,913 deficiency in his 2006 federal income tax, Schramm petitioned the Tax Court, arguing that he was a statutory employee of the university and entitled to deduct his claimed business expenses. The court applied a facts-and-circumstances test of the common-law rules to determine if he was a common-law employee. The court addressed eight factors, including the degree of control exercised by the university, Schramm’s investment in work facilities and his opportunity for profit or loss.

The court found that the university either controlled Schramm’s teaching or had the right to do so. Schramm’s investment in facilities, tools or other necessary items was not substantial. He had negligible risk of loss or opportunity for profit beyond his set salary. And, the court held, the understanding between Schramm and the university of their relationship was that of employee and employer. Accordingly, the court concluded that Schramm was a common-law employee and therefore could not be a statutory employee or independent contractor.

  Schramm , T.C. Memo. 2011-212

By Steven C. Thompson, CPA (retired), Ph.D., professor of accounting and taxation, Texas State University, San Marcos, Texas.

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